On Dec. 15, 2010, the New Mexico attorney general released a rule concerning the collection of time-barred debt in New Mexico. The rule requires debt collectors to determine whether a debt is time-barred and provide certain disclosures when collecting time-barred debt in New Mexico. The rule defines time-barred debt as “any debt that is not enforceable in a judicial proceeding because the applicable statute of limitations has run.” A copy of the final rule, as well as the attorney general’s statement regarding adoption of the rule, is available here.
The rule is effective Dec. 15, 2010. In response to a request by ACA, the attorney general will delay enforcement of the rule until March 15, 2011. However, ACA’s Compliance Department is currently reviewing whether a consumer may immediately enforce this new rule. ACA members should immediately review this new rule and undertake appropriate internal review of their policies and procedures to determine steps to comply with the rule.
If the debt collector has reason to know or knows a debt is time-barred, the collector must inform the consumer of the following:
“We are required by New Mexico Attorney General Rule to notify you of the following information. This information is not legal advice.”;
The debt is or may not be enforceable through lawsuit because the applicable statute of limitations has or may have expired;
If the debt is time-barred, the consumer cannot be required pay through a lawsuit;
Admission, affirmation or acknowledgment of the debt, a promise to pay the debt, payment of the debt or a waiver of the consumer’s rights regarding the expiration of the statute of limitations is not required; and
The consequences of reviving the statute of limitations by acknowledging the debt, promising to pay the debt or waiving the statute of limitations.
The rule provides a model disclosure deemed to be in compliance with the rule:
We are required by New Mexico Attorney General Rule to notify you of the following information. This information is not legal advice:
This debt may be too old for you to be sued on it in court. If it is too old, you can’t be required to pay it through a lawsuit.
You can renew the debt and start the time for the filing of a lawsuit against you to collect the debt if you do any of the following: make any payment of the debt; sign a paper in which you admit that you owe the debt or in which you make a new promise to pay; sign a paper in which you give up (“waive”) your right to stop the debt collector from suing you in court to collect the debt.
In written communications the disclosure is required to be clear, in plain language and conspicuously placed on the front of the page. If the communication is oral, the disclosure must be made verbally immediately before or after the first statement requesting payment. If no request for payment is made during oral communication, the disclosure must be made immediately after the first reference of the debt.
The disclosures are required for both initial and subsequent communications.
Importantly, the rule specifically states the above disclosures must be given only to those consumers whom the debt collector reasonably and in good faith determines owe a debt that is time-barred.
Lastly, if a debt collector makes an erroneous determination regarding the status of a debt, the collector may not be liable for a violation of the rule if the collector exercised reasonable efforts to determine whether the debt was time-barred. Documentation must be provided in support of the collector’s determination for the defense to stand.
A violation of the rule constitutes a violation of the New Mexico Unfair Practices Act.
ACA, the New Mexico Collectors Association and other groups, such as DBA International, submitted comments opposing the rule and offering alternative solutions when the rule was originally proposed in early 2009. Although the final rule adopted or incorporated certain suggestions and commentary from ACA and other groups, ACA was unaware of any revised version of the rule between June 2009 and December 2010. ACA will continue to communicate with the New Mexico Attorney General’s Office to seek clarification of the new rule as appropriate.